Moderate — Review
3 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
3
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
55 / 100
FranchiseVerdict composite
Rating
MODERATE
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
24
Government-backed loans issued
Default rate
0.0%
vs <3% typical · system-wide
5-yr default rate
0.0%
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$13.5M
Avg loan size
$560K
Participating lenders
10
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Required
Disputes resolved outside court — limits your legal options
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Florida
State whose law governs disputes — relevant if you're not based there
What drove the 55/100 rating
Risk Score Breakdown
- 01HIGHSettled litigation involving fraudulent inducement and negligent misrepresentation regarding termination of franchise agreements—indicates systemic disputes over contract enforcement
- 02MEDNo Item 19 (Average Unit Volume) disclosure—inability to assess actual profitability; combined with undisclosed net income, prevents ROI validation
- 03MINORModest unit growth of 7.1% YoY against high initial investment ($263.5K–$622.5K) suggests marginal unit economics and potential market saturation
- 04MED6% minimum royalty floor on undisclosed revenue base creates cash flow risk; royalty burden is unknown without average unit volumes
- 05MINORCollective settlement agreement indicates multiple franchisees had termination grievances—suggests franchisor enforcement practices or performance expectations may be problematic
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.